Pay Off Holiday Debt Faster
It’s no secret that the Holidays can be the most expensive time of the year. It can be lots of fun too with different parties to attend, gift giving, and family dinners. It seems everything has a cost, no matter how small. Even the little things like a small hostess gift and themed napkins at home can easily add up.
Nearly half of all Canadians are drowning in debt as per a recent article reported by BNN Bloomberg October 2019. You may feel that you fall into this category once the holidays are over. You may have even felt like this before the holidays even started. If you leave this debt unchecked, it can hang around all year, even into the next holiday season.
It’s in everyone’s best interest to pay off Holiday debt right away in the New Year. Don’t let your debt get out of control. Below are some guidelines on how you can eliminate your Holiday debt and get your finances in control.
Making a Game Plan
If you want to pay your debt off, you’re going to need to strategize.
- Start by writing down what you owe.
- Estimate the interest you’re looking at having to pay until the debt is paid off.
- Review the interest rate. Seeing the number will help it sink in.
- Try to get your debt with the best interest rate option. The lower the better!
- Break down what’s coming in and what’s going out.
- Tally your income sources, bills and necessities.
- List all your other expenses – everything you spend and pay out regularly.
- Remember to prioritize your needs versus your wants.
- Priority should be on all your utilities, mortgage/rent, groceries, gas for work, vehicle for work, childcare, etc.
- Total your income minus your priorities. This is the extra money you will put towards paying off your holiday debt, along with any other debt and responsibilities you have in your household.
- If you have money left over, ask yourself: which debt will I pay off first after ensuring all debt is paid their minimum payment?
- If you have no money left over after your priorities, ask yourself: what expenses can be cut back on or eliminated completely? Once you have done this, do you have money left over to pay on debt?
- Consider a reasonable amount of time in which you can pay off your debt. Break it down and see if there’s even flexibility to improve on that date.
- With a date in mind, you’re able to deconstruct your game plan into months, weeks, and days, making goals realistic and attainable.
- Plus, when there’s a finish line, you not only strive for it, you strive for it faster.
- It’s proven that when people are within reach of their goals, they start putting in more effort. Think of ways to reward yourself once you reach your goal!
The most crucial part of your game plan? Avoiding more debt while paying off old debt. It will be impossible to make progress if you’re continuously adding more money (and interest!) to the pile.
Good tip: Put the credit card away until you’ve hit your goals.
Remember, what is done is done. If you realize now that you overspent, then reflect and take notes on how to address gift giving going forward. Maybe consider a more realistic budget amount for next year and put savings away for this goal.
Did the Holidays put your finances in a tough place? Do you need help creating a game plan to get you out of debt? Contact us and we’d be happy to assist!